Weber Says ECB Monetary Policy Increasingly Effective


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They wouldn’t dare give the rising budget deficits any credit.

Weber Says ECB Monetary Policy Increasingly Effective

by Christian Vits

May 18 (Bloomberg) — European Central Bank Governing
Council member Axel Weber said the bank’s monetary policy is
increasingly stabilizing the economy.

“Monetary policy is contributing significantly to the
stabilization of the economy and its effectiveness is
increasing,” Weber, who heads Germany’s Bundesbank, said in a
speech in Dusseldorf today. After a “massive” reduction of the
ECB’s benchmark interest rate, the present level of 1 percent
“is appropriate in the current environment,” he said.

In additional to cutting its key rate by 3.25 percentage
points since early October, the ECB has announced it will buy 60
billion euros ($81 billion) of covered bonds and extend the
maturities in its unlimited refinancing operations to 12 months.

Weber said providing banks with as much money as the need
is “of particular importance” and extending the maturities of
the loans “certainly will push the yield curve even lower.”
The plan to buy covered bonds is in line with the ECB’s strategy
of supporting the banking channel, he said.


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